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The CFPB May be Running Out of Things to Regulate

By Blair Rugh 15 Mar 2017

I am probably overly optimistic and naive but the Consumer Financial Protection Bureau  (CFPB) may be running out of new things to regulate. If you look at their list of proposed rule makings, there is virtually nothing there other than a few meaningless tweaks of present rules. That may not necessarily be good news because under President Trump's regulatory Executive Order, for every new regulation the issuing agency has to eliminate two existing regulations. Maybe if the CFPB had several new regulations to issue, it would have to get rid of some of those that are already on the books. At any rate, the regulatory calendar from the CFPB for the next few months looks pretty benign. From a compliance standpoint, it seems to be concentrating its efforts on credit bureaus, debt collection agencies, and small loan companies.


The other piece of good news is that the CFPB is not hiring. Whether it is the result of President Trump's government hiring freeze or otherwise, if you go to the employment portion of the CFPBʼs website it says that there are no positions available. But what are the some 6,000 CFPB employees going to do? The CFPB is morphing into the Consumer Financial Education Bureau. Their problem is that an individual's financial needs are case specific and all the CFPB can do is give generic information. Case in point is Megan.


Megan is an employee of the CFPB and I am sure a very nice person. I got an email from her a few months ago stating that she was going to periodically provide advice to home buyers and I signed up for her advice. Her first advice email was on how to deal with bad credit. Her advice was to pay your bills timely. Not bad advice, but I questioned its value. Her second was on how to choose a down payment amount. Her first question was how much have you got. Then if that is not enough, save more. Alternatively, ask your family or friends for gifts. Since my family consists of my wife, children and grandchildren who I know are not going to give me any money, I appeal to you. Please send money and if I get enough, I will buy a new house. Her most recent email asks the question if there is a difference between prequalification's and preapprovals. When you open the email it gives you the answer, no. Boy, that is valuable information.


The point of all of this is how much is the government spending trying to educate consumers, is this something the government should be doing, and does it have any value? I know Megan has a support staff tasked with thinking of things to write about, and doing the writing. Also Megan is only one facet of the CFPBʼs education program. Did you know that the CFPB even has a book of the month club? Kind of like Oprahʼs favorite things. Some team at the CFPB is reading financial literacy books and then making a recommendation. We will never know what the cost is but we can get an idea of the value. Since the CFPB began keeping its complaint database several years ago, it has registered 1.1 million complaints, or a little over 300,000 a year. That seems like a lot until you realize that the population of the United States is about 326 million. Assume that about 200 million of those are adults. If that is the case, a minuscule percentage of people have filed a complaint. If the CFPB has to do something, better this than beating up bankers.


On another note, the CFPB has published a proposed notice to delay the implementation of the prepaid account rules under Regulation E. They are scheduled to become effective in October of this year, but will be delayed for an additional six months until March of 2018.

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